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Global Market Wrap-Up - January 8, 2013

Tuesday, January 8, 2013
Mark Hanna
U.S. stocks continued to pull back modestly after the large two day rally at the turn of the year, but the story of the day was the continuing bubble forming in the student loan market. As for the indexes the S&P 500 fell 0.3% and the NASDAQ 0.3%. The Federal Reserve said borrowing for the month of November rose by $16B; of that $15.2B was student loans! As many of you might know by now, the government has taken over almost all of the student loan market, very similar to how 90% of all mortgages are now backed by the federal government. So when these loans go bad (as they already are at an increasing rate) you know who is on the hook for the losses.
  • The Federal Reserve said that consumers increased their borrowing in November by $16 billion from October to a seasonally adjusted record of $2.77 trillion. Borrowing that covers autos and student loans increased $15.2 billion. A category that measures credit card debt rose just $817 million.
  • Four years ago, Americans carried $1.03 trillion in credit card debt, an all-time high. In November, that figure was 16.5% lower. At the same time, student loan debt has increased dramatically. The category that includes auto and student loans is 22.8% higher than in July 2008.
  • The National Federation of Independent Business said its small-business-optimism index for December edged higher, but it was still the second-worst reading since March 2010.
Crude oil fell 4 cents to $93.15, gold gained 1% to $1662.20 and silver gained 1.3% to $30.46.

British stocks fell 0.2%, German stocks 0.5%, while France was fractionally higher.
  • The European Commission reported that unemployment in the 17-nation euro area rose to a euro-era record of 11.8% in November, up from 11.7% in October.
  • Meanwhile, retail sales for the region rose a less-than-expected 0.1% in November.
  • German data showed exports dropped 3.4% in November.
Japan dropped 0.9% and China 0.4%.